Time Your Exit With the ICWR Forex Method


ICWR stands for: means Impulsive/Corrective Wave Retracement. The ICWR forex system is a number of rules that traders use to determine entry and exit points in trading the forex market.

The ICWR forex system has been developed using a combination of the Elliott Wave Theory and Fibonacci ratios. Traders have found that corrective market movements have a tendency to retrace the preceding impulsive market movements by a Fibonacci ratio.

So what are corrective market movements? Corrective market movements are short-term corrections that move against the long-term market trend. The major market movements in in alignment with the long-term market are referred to as impulsive market movements. Bring up a chart of a major currency (say the GBP/USD) with the interval set on daily and you will easily see the long-term trend, along with several corrective market movements.

The most frequent Fibonacci ratios observed in the ICWR forex system are 25%, 38%, 50%, 61% and 75%.

Most traders use the ICWR forex system with an existing entry system to assist with their exit strategy to take out the most profit possible out of the trade. In fact many traders have found that managing a trade and determining the exit level is more important than selecting an entry point and direction to trade in.

The ICWR forex system is very easy to use. Simply bring up a chart of an interval you want to trade, find the preceding impulsive wave (in the direction of the long-term trend) and calculate the Fibonacci ratios. Now record the Fibonacci ratios on your chart. For example if the preceding impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% you will place a line 25 pips below the high of the impulsive wave. Most charting packages come with a Fibonacci utility built in, calculating the ratios and drawing in lines for you.

These Fibonacci ratios can then be put to use in a number of ways:
- move your stop loss with each impulsive wave in your favor to maximize profit and minimize risk (the 75% ratio is usually used for this)
- determine when the corrective wave is probable to end in order to determine the best entry points.

Traders often tend to worry when their trade is in profit and it begins to move against them. By using the ICWR forex system you will be better prepared to ride out the corrective market movements in order to take out the most profit from your trades.